Wall Street has been in the midst of an AI-inspired tear for more than three years now, with the S&P 500 closing out 2025 with further double-digit gains. But could 2026 be shaping up to become the index's biggest test since the arrival of ChatGPT in November 2022? 

The S&P 500 index, which is comprised of the 500 largest companies listed in the U.S., posted growth of 16% in 2025, adding to the 23% recorded in 2024 and the 24% gained in 2023. 

Such consistent outperformance isn't unprecedented, but it is extremely rare. In the post-war era, the S&P 500 has only posted three years of consecutive double-digit growth three times. However, history also comes with a warning for bullish investors. 

In the 1990s, similar rip-roaring streaks of consistent growth prompted Wall Street to post gains for two more years before plummeting 49% over a period of two and a half years. 

Following a steep market crash at the beginning of Q2 2025, following the announcement of President Trump's Liberation Day tariffs, investors were handed an indication of the fragility of the ongoing bull run before markets recovered to continue on their record-breaking rally. 

Today, the S&P 500 sits on the precipice of reaching 7,000 for the first time, just five years on from breaking the 4,000 barrier. But what's on the horizon for the S&P 500? And what could expert predictions mean for investment strategies over the year ahead? 

AI and Tariffs Drive Mixed Outlook

Uncertainty surrounding what the future may hold for artificial intelligence and the tariff outlook has drawn mixed predictions for the S&P 500 looking to the year ahead. 

At the lower end of the spectrum, analysts at the Bank of America have forecasted the benchmark index to reach 7,100 by the end of 2026, representing an approximate 3.72% gain from today. Meanwhile, Deutsche Bank has adopted a more bullish outlook, forecasting the 8,000 barrier to be surpassed for a gain of 16.87%. 

Elsewhere, analysts at Barclays, JPMorgan Chase, and HSBC have all offered predictions that the S&P 500 will fall between 7,400 and 7,500 points by the year's end, while the likes of Goldman Sachs, Citigroup, UBS, Morgan Stanley, and Wells Fargo have suggested that between 7,600 and 7,800 is a more likely range. 

Uncertainty is a key factor in forecasts for the year ahead. According to analysts at Vanguard, high AI stock valuations and the prospect of more tariff jitters could create a scenario where the S&P 500 falls around 10%. However, the experts have suggested that a high tariff landscape, slowing economic growth to 2.8%, and a more muted increase of 6% for the index is the most likely outcome for the year. 

Although the unpredictability of tariffs can be a confounding factor for investors this year, 2025 demonstrated Wall Street's adaptability in the face of uncertainty, with a level of resilience that helped markets to recover quickly from the steep shock of the Trump Administration's reciprocal tariffs announced in early April. 

This ability to remain fixed on the bigger picture could help the S&P 500 overcome the geopolitical noise that threatens to disrupt its growth. 

Tech Valuations are a Concern

Although the artificial intelligence boom has drawn comparisons to the dotcom bubble in recent months among analysts, the transformative potential of the technology calls for investors to judge AI on its merits rather than previous trends. 

However, it's worth investors keeping an eye on similarly inflated valuations throughout the AI sector. Unlike the dotcom bubble, an estimated 30% of the S&P 500 is concentrated in artificial intelligence companies, and this could make a market correction far steeper. 

Given that Nvidia (NASDAQ:NVDA), Wall Street's strongest AI performer since 2022, has not only soared more than 1,300% in five years but also accumulated a trailing price-to-earnings (P/E) ratio of around 46 in the process, it's clear that there's a great deal of speculation driving many of the S&P 500's tech leaders today. 

What's Next? 

The three straight years of double-digit growth for the S&P 500 underline the speculative nature of investors on Wall Street today. 

While it's natural for uncertainty to kick in as valuations reach greater proportions, it's never been more important for investors to judge stocks on their underlying qualities. 

Many analysts believe that the artificial intelligence boom won't turn into a bust. But investors hoping for an endless bull market may find themselves disappointed by their returns in 2026. 

Adding some diversification away from AI could go a long way in achieving some solidity in portfolios as more analysts become wary of the S&P 500's growth prospects. The past three years have seen artificial intelligence steal the headlines, but 2026 may shape up to be a year for more resilient stocks.

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Disclosure: On the date of publication, Dmytro Spilka did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer. Dmytro Spilka does not intend to make a trade in any of the securities mentioned above in the next 72 hours.

Benzinga Disclaimer: This article is from an unpaid external contributor. It does not represent Benzinga’s reporting and has not been edited for content or accuracy.

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